Mitsubishi UFJ Financial Group Inc. (8306) is seeking to sell its Thai unit to Bank of Ayudhya Pcl in return for about 8 percent of Thailand’s fifth-largest lender, said three people with knowledge of the matter.
Bank of Ayudhya would issue new shares to Mitsubishi UFJ, helping the Japanese bank’s effort to build a controlling stake in the lender, the people said, asking not to be identified as the details are private. The proposed sale would value the Mitsubishi UFJ business at about 18.2 billion baht ($588 million), based on Bank of Ayudhya’s market capitalization of 227.8 billion baht.
Mitsubishi UFJ this month offered to buy as much as 75 percent of Bank of Ayudhya for $5.6 billion from shareholders including General Electric Co. (GE), which agreed to sell its 25 percent (BAY) stake to Japan’s largest lender. Mitsubishi UFJ is seeking to purchase as much an additional 50 percent of Bank of Ayudhya from other investors.
Selling the business would allow Mitsubishi UFJ to comply with Thai rules that bar lenders from running more than one bank in the country. When it announced the deal to buy Bank of Ayudhya, Mitsubishi UFJ said it would hold talks with the Thai lender about integrating the Bangkok branch.
A deal has not been finalized and the terms may change, two people said. Kazunobu Takahara, a Tokyo-based spokesman for Bank of Tokyo-Mitsubishi UFJ, declined to comment on details of the branch sale. Bank of Ayudhya didn’t reply to an e-mailed request for comment.
Mitsubishi UFJ’s Bangkok-based branch offers services including commercial lending, issuing letters of credit and deposit-taking, its website shows. The business, part of Bank of Tokyo Mitsubishi UFJ Ltd., had 596 billion baht of assets as of May, according to Thailand’s central bank.
The purchase of Bank of Ayudhya will give Mitsubishi UFJ a bigger foothold to expand retail and corporate banking in Southeast Asia’s second-biggest economy. The Ratanarak family owns 25 percent of Bank of Ayudhya and Mitsubishi UFJ has no plans to purchase that stake, two of the people said.